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Precious Metals Exit Strategies

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  • Tue, Sep 01, 2009 - 09:24pm

    #1

    okubow

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    Precious Metals Exit Strategies

Hi all, just wondering what the pm exit strategy is? When are you supposed to sell or use the stuff?

The exit strategies I’ve heard so far have been:

1. When 1oz. of gold buys the dow jones.

2. When a gold mania starts and gold prices go vertical.

3. When 1oz. of gold buys a house.

I’m no expert, but 3 seems a little out there. Also, wouldn’t it depend on the general economic climate; for example what if 1 occurs during a period of extreme dollar volatilty?

As you can tell, I’m a newbie to precious metals. This question has got me stumped. Just wondering if some of you knowledgeable folks out there can shed some light on the issue for me and the other newbies out there.

  • Tue, Sep 01, 2009 - 10:13pm

    #2
    Peak Prosperity Admin

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    Re: Precious Metals Exit Strategies

Chris M has indicated he will buy land when it hits an oz an acre…..

Cheers Hamish

  • Tue, Sep 01, 2009 - 10:35pm

    #3
    Peak Prosperity Admin

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    Re: Precious Metals Exit Strategies

1 oz of gold will always buy a nice suit of clothes for a man or 400 loaves of bread.

exit whenever you wish. . .

  • Wed, Sep 02, 2009 - 03:23am

    #4
    Peak Prosperity Admin

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    Re: Precious Metals Exit Strategies

I plan to hold a certain percentage of PMs for the rest of my life (and perhaps) pass them down to my children.  CM has also suggested that once a nation develops a strong industrial  base and year after year maintains a trade surplus, it may be a good time to unload some PMs and get back into the currency. (I may not be completely accurate in how I quoted him).  He then commented, not to worry, we probably wont be in that situation any time soon.  

  • Wed, Sep 02, 2009 - 03:59am

    #5
    Peak Prosperity Admin

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    Re: Precious Metals Exit Strategies

3. When 1oz. of gold buys a house.

I think you may confused by how this will work.  No one will ever sell a house for 1oz of gold.  A house is a hard asset that has utility value far beyond 1oz of gold and there are far more oz of gold in the world than available houses.  What may happen is that 1oz of gold may be able to pay off the mortgage on a house that you already own.  This will only happen when your debt is denominated in some hyper-inflated currency.  In other words, its not that 1oz of gold becomes extremely valuable, but that fixed debt becomes extremely cheap due to monetary debasement.

I hope that helps.

  • Wed, Sep 02, 2009 - 04:05am

    #6
    Peak Prosperity Admin

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    Re: Precious Metals Exit Strategies

I can’t see that there would be one set answer for everyone. There are those that will hold gold(or some fraction of it) forever. Then there are the patient investors that will sell if there is a mad stampede for gold and accompanying meteoric rise in the spot price. Most of us will probably be in between where we fret about the ideal time to sell and trim down our holdings piecemeal in the meantime. My only fear is selling too soon in a significantly  inflationary environment where any gains may be minimized by a rapidly deteriorating value of the paper money. I had read about these poor chaps in Argentina that sold gold for a great profit but just ended up with more bundles of relatively worthless paper money than their fellow countrymen that had not invested in gold. I certainly don’t think we can count on most of the “experts” selling gold to the public to be a source of knowledge here. Their advice is of course to buy and hold.

  • Wed, Sep 02, 2009 - 04:35am

    #7
    Peak Prosperity Admin

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    Re: Precious Metals Exit Strategies

I still think Chris Martenson’s idea is best, for a lot of reasons.  When an ounce of gold will purchase one acre of arable land, then sell PM and get the land.

(Then dig a well, plant a big garden, get some chickens, build a cabin to stay warm and dry, and, of course, put up a 50′ tall steel fence around it.} Cool

  • Wed, Sep 02, 2009 - 05:18am

    #8
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    Re: Precious Metals Exit Strategies

When an ounce of gold will purchase one acre of arable land, then sell PM and get the land.

But will that ever happen?  Once again 1 acre of arable land has REAL utility value.  Why would anyone want to sell a REAL hard asset for 1oz of gold in that situation?

How many oz of gold are there in the world and how many arable acres of land are there?  If there are a lot more oz of gold, I don’t see that is ever going to happen except in some sort of gold bubble situation. 

  • Wed, Sep 02, 2009 - 07:27am

    #9
    Peak Prosperity Admin

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    Re: Precious Metals Exit Strategies

Thanks for the replies. I just bought a small amount of gold and silver bullion coins. I bought them for a number of reasons that I don’t really want to list in this post, but I’m glad to have them. I’m young and I work in one of the only countries in Europe with a growing economy and a sound banking sector (Poland). (Maybe I should say, “sound for now.”)

I guess I’ll just hold on to my bullion for now, and see what happens.

  • Wed, Sep 02, 2009 - 07:56am

    #10
    Peak Prosperity Admin

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    Re: Precious Metals Exit Strategies

[quote=goes211]

When an ounce of gold will purchase one acre of arable land, then sell PM and get the land.

But will that ever happen?  Once again 1 acre of arable land has REAL utility value.  Why would anyone want to sell a REAL hard asset for 1oz of gold in that situation?

How many oz of gold are there in the world and how many arable acres of land are there?  If there are a lot more oz of gold, I don’t see that is ever going to happen except in some sort of gold bubble situation. 

[/quote]

It may seem absurd on the surface that something with that much real utility value could be bought with an oz of gold, but as we see all the time humans are not always rational creatures.  Many of us are so far removed from the sources of the food we eat that we fail to appreciate the true value of quality farmland.  That will probably change over time if/when food becomes more scarce and expensive, but until then there will be people more interested in money in its varied forms than anything else.  I’m sure this probably sounds cold and opportunistic, but on some level I hope to see such opportunities in the years ahead.  I’m relatively young and haven’t got the wealth yet to procure any such land outright at this time (or some of the things required to develop/cultivate it), and even though I’m saving like mad I don’t see long-term security as far as regular income is concerned.  I’m not counting on a gold bubble to dramatically increase my wealth and purchasing power, but I will gladly take advantage of it if it comes to pass…

– Nickbert

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